EDITORIAL: by Peter WestmoreNews Weekly
Mr HowardÂ’s circuit-breaker
, April 8, 2000
As the Liberal-National Party Coalition Government prepares its Budget for the year 2000, it faces the reality that its survival in next year's election will depend upon finding a circuit breaker to bring its increasingly alienated rural heartland back to the Coalition.
When John Howard's Government was first elected in 1996, its landslide victory was founded on a groundswell of opposition to 13 years of the Hawke-Keating government, not least in rural and regional Australia, which had been battered by the impact of years of low prices for export commodities, coupled with declining government services and the withdrawal of essential facilities provided by the private sector, like banking.
Four years on, despite continued growth in the economy as a whole, their expectations for change have been frustrated by an acceleration of the withdrawal of both private and public services, accompanied by continued comments by government leaders that the process of change - variously described as "economic rationalism" or "globalisation" - is both inevitable and irreversible.
The recent report of the Rural Industries Research and Development Corporation, titled, Impact of Declining Rural Infrastructure, based on detailed surveys of around 400 people in the central wheat belt of Western Australia, identified a complex matrix of issues - some economic, others educational and social, and still others identified with a withdrawal of government services in health, finance and communications - which are driving people off the land.
The report shows that over the past 10 or 15 years, most Australian farmers have tried a number of strategies to remain viable, from purchasing new equipment, including computers; increasing cropped acreage; increased fertiliser usage; and increased stock numbers; as well as bartering goods and services with neighbours, and increasing off-farm income.
The stark reality is that while some medium-sized country towns are growing, many smaller towns and rural areas are slowly haemorrhaging to death, under growing rural debt, the drift of older farmers and young people to the cities, and collapsing infrastructure.
The sense of alienation in rural and regional Australia stands in stark contrast to the apparent prosperity of corporate Australia, evident in the record profits of the Australian banks and Testra, which are continuing to slash employment and services to rural Australia.
The policies of large corporations in the finance and communications industries are driven not by the needs of their customers, but by the demands of shareholders, increasingly foreigners, for higher returns on their investment.
This is the driving force behind the fact that for banks, soon over half their profits will come from charges and management fees - not from interest on loans to their traditional customers.
The push for larger markets and higher profits is also driving the banks to become players in the global economy, through a policy of mergers and corporate takeovers.
In the course of all this, their important role as providing essential financial services to small businesses, farmers and families, is being largely ignored.
At the same time, the problems in the Australian economy, particularly the growth of its foreign debt, are becoming more obvious.
The steady decline in the value of the Australian currency against the US dollar, and the recent warning by the head of the Commonwealth Bank on the unsustainability of the $247 billion foreign debt, highlight the fact that current prosperity in Australia could end suddenly.
In fact, with Australia forced to follow interest rate rises in the United States, home buyers, small businesses and farmers must expect to pay more on their borrowings over the next few years.
All this is bad news for a government just 18 months out from the next election.
What is needed is a radical change from the apparently inexorable logic of blind market forces.
Mr Howard has shown that he can act differently and decisively when he chooses. He repackaged John Hewson's GST and won a Federal Election on it - although he may live to regret the policy.
Last year, against the opposition of the Department of Foreign Affairs, he single-handedly pushed through the policy shift which led to East Timor's vote for independence, and the Australian-led International Force in East Timor (Interfet).
What is now needed is the establishment of a new Commonwealth banking system for Australia, to provide low-interest loans to farmers, families and small businesses, with a sufficient infrastructure to provide the services no longer provided by the big four banks.
These are the services once offered by three Commonwealth banks - the Commonwealth Development Bank of Australia, the Australian Resources Development Bank, and the Primary Industry Bank of Australia - all of which operated until the 1980s.
If this were done as part of a program to develop Australia's infrastructure, the tide of opinion against the government might well be reversed, and the prospects for rural and regional Australia would be substantially improved.